Supreme Court Remits NCDRC's Quantum Determination in Insurance Claim for Fresh Consideration and Directs Transfer of Deposit

A bench of Justices Sanjay Kumar and Augustine George Masih heard an appeal by United India Insurance Co. Ltd. challenging the National Consumer Disputes Redressal Commission’s (NCDRC) award on the quantum of compensation in a consumer complaint filed by M/s Park Leather Industries Ltd. The appeal arose from repudiation of an insurance claim after a factory shed collapse during heavy rainfall.

The Court allowed the appeal in part and remitted the matter to the NCDRC for fresh consideration on the question of quantum. The bench held that the NCDRC had erred in deciding the amount payable solely on the ground that the insurer had not disputed a surveyor’s assessment produced by the complainant for the first time in its rejoinder. The Court noted that the insurer’s own surveyor had assessed a substantially lower loss and that the NCDRC had “blindly acted” on a procedural omission rather than independently quantifying the claim. The Court directed the Registry to transfer the amount deposited by the appellant to the NCDRC and ordered that it be invested in a fixed deposit with auto‑renewal pending final adjudication. The Court observed that the NCDRC should give the matter priority and dispose of it expeditiously. The Court, in its reasoning, observed: “In any event, it is patently clear that the NCDRC did not independently apply its mind to the quantification of the claim and blindly acted upon the alleged failure of the appellant to deny the assessment in the surveyor’s report produced by the respondent. This impression, as pointed out earlier, was unfounded and erroneous. It would, therefore, be just and proper that the NCDRC undertakes that exercise now, by allowing the parties to adduce evidence in that regard, and then decide the amount that would be payable to the respondent under the insurance policy.”

Background The respondent purchased a comprehensive fire and special perils policy for the period 30.06.2005 to 29.06.2006. On the night of 01.08.2005 heavy rainfall allegedly caused the respondent’s factory shed to collapse, resulting in claimed damage to plant & machinery, stocks and buildings. The respondent lodged a claim for around ₹91 lakh. The insurer appointed a surveyor who assessed loss at ₹8,89,176 and ultimately repudiated the claim by a letter dated 19.12.2006, contending that the cause was not the insured peril of “inundation” but gradual weakening and seepage, which fell outside cover.

The respondent approached the NCDRC under Section 21(a)(1) of the Consumer Protection Act, 1986. Along with its rejoinder before the NCDRC, the respondent produced a surveyor’s report assessing loss at ₹46,97,085 and contended that the premises had been renovated in 2003 and were not in a state of disrepair. The NCDRC accepted the respondent’s assessment, stating: “Regarding the question of compensation, the Surveyor appointed by the Complainant assessed the loss at Rs.46,97,085/-. In the written statement, filed by the Insurance Company they have not stated that the assessment made by the Surveyor deputed by the Complainant was wrong. Since the Insurance Company has not disputed the assessment made by the Surveyor appointed by the Complainant, the Complainant is entitled to the said amount of Rs.46,97,085/-.” The NCDRC directed payment of ₹46,97,085 with interest at 9% per annum from repudiation, enhanced to 12% in case of delay.

This Court stayed operation of the NCDRC order on 06.02.2023 subject to deposit of 50% of the award; the insurer deposited ₹57,12,874 which accrued to ₹63,60,833 in fixed deposit. Before this Court the insurer did not contest liability under the policy but challenged the quantum, arguing that the NCDRC erred in relying on a unilateral assessment produced in the respondent’s rejoinder which the insurer could not have denied earlier. The Supreme Court agreed and remitted only the question of quantum to the NCDRC for a fresh, independent quantification allowing both parties to adduce evidence. The Registry was directed to transfer the deposit of ₹63,60,833 along with accrued interest to the NCDRC to be invested in a fixed deposit with auto‑renewal; parties were to bear their own costs.

Case Details: Case No.: Civil Appeal No. 913 of 2023 Case Title: United India Insurance Co. Ltd. and Another v. M/s Park Leather Industries Ltd. Appearances: For the Petitioner(s): Not indicated in the judgment For the Respondent(s): Not indicated in the judgment